Thinking the unthinkable: layoffs and hospital closures
From the May 1996 ACP Observer, copyright © 1996 by the American College of Physicians.
By Deborah Gesensway
The Department of Veterans Affairs' health care system--long reviled as the epitome of bureaucratic inefficiency yet acclaimed for the medical care it provides to a needy, high-cost population few in the private sector would choose to serve--is steeped in contradictions.
Under a new management team, however, a dramatic restructuring has begun that aims to reconcile some of the contradictions in the nation's largest integrated health care system.
The overarching goal is to transform the outdated and bloated $16 billion hospital network into a more streamlined, modern health care system that will stress outpatient services, primary care and capitated payments dispensed by 22 regional veterans integrated service networks (VISNs, pronounced "visions"). The incentive to restructure is fueled by both budgetary pressure and mounting criticism that the system neither adequately addresses veterans' health care needs nor fully uses its existing facilities.
The federal General Accounting Office last year criticized the VA's restructuring efforts as focusing "primarily on preserving or expanding VA's direct care system rather than on how to better meet the changing health care needs of veterans." And an editorial in the Journal of the American Medical Association (JAMA) last year expressed concern that as the VA "attempts decentralization, the rest of the U.S. health care system is moving in the opposite direction. ... Rather than 'mainstreaming the VA's patients,' the general system is becoming more like the VA, with consequences yet to be determined."
Meanwhile, Washington's budget crisis is threatening the second-largest government department's status as a sacred cow immune to cutbacks; President Clinton's proposed 1997 budget includes VA layoffs, which could even involve some doctors and nurses. And for the first time in decades, as the Washington Post reported this month, some congressmen are expressing a willingness to propose the politically unthinkable--closing some underused VA hospitals.
The VA's restructuring efforts are in part designed to help advance the debate about what facilities and programs are appropriate and necessary to meet the needs of the small percentage of veterans who depend on the VA for their care, said Thomas L. Garthwaite, MD, the VA's deputy undersecretary for health. (The VA cares for only a fraction of the nation's 26 million veterans. Of those who are eligible for VA care--basically those with service-connected disabilities or those who are very poor--only 40% use the facilities for their health care. The rest obtain care in the private sector through private insurance or Medicare. The VA treats about 3 million veterans each year.)
According to Dr. Garthwaite, the newly formed VISNs will first look at realigning regional programs by comparing costs and quantities of service provided by particular VA programs to those provided in the private sector.
"It's a way to force people to face the facts and to give us a chance to at least raise the issues [of closures, mergers and realignments]," he said. "You can dismantle us, but you would have to build a lot somewhere else."
So far, the VISNs and related management changes have increased efficiency and generated excitement that more dramatic change is imminent. VA administrators boast, most recently in an article in the April 10 JAMA, that their efforts have already saved the government at least $18 million by eliminating redundant management and 23% of the forms and by instituting bulk purchasing agreements. The VA, as well, is ahead of schedule in its goal of matching all its patients with a primary care provider.
"While the VA was initially slow to respond to the changing U.S. health care environment, it is now in the throes of one of the most profound transformations of any organization in American history," wrote Kenneth W. Kizer, MD, MPH, VA undersecretary for health, in JAMA.
Some physicians well versed in VA operations, however, express skepticism that these changes will amount to true reform of a system that needs changing. And, if change does happen, some wonder if it will be in the right direction or if it will only exacerbate the system's inherent contradictions.
For example, said Samuel V. Spagnolo, FACP, a VA pulmonologist, professor of medicine at George Washington University and president of the National Association of Veterans Affairs Physicians and Dentists, the word from the administration is that the VA is now going to concentrate on delivering health care services. "Where does that leave the other two components of education and research? This has gotten a lot of people concerned." If the VA were to drop its teaching and research missions, he said, a good argument could be made for replacing the VA system with a voucher program that would allow veterans to get their care in the private sector.
Dr. Garthwaite disputes Dr. Spagnolo's claims, saying he does not think the reorganization will negatively affect the VA's teaching programs. "We believe that our fate and the fate of academic medicine are intertwined." About half of all doctors in the U.S. receive a significant part of their training in VA hospitals, he said, and in some states such as Minnesota, the number is more like three-quarters. "It is not our goal to mess up what works about the VA," he said.
If too much emphasis is put on moving to an HMO-style, primary-care model of care, Dr. Spagnolo said he also wonders what will happen to the quality and quantity of the inpatient care required by so many VA patients. These patients are sicker, older, poorer and suffer from more mental illness, substance abuse and disabilities than the rest of the nation's population. Organizations representing veterans have voiced concerns that since programs for disabled veterans are expensive, they could be targeted in this cost-cutting era, regardless of administration promises to the contrary.
And, Dr. Spagnolo said, since "the budget remains up in the air," many VA staff members are worried about their futures. The president's 1997 budget proposal would require the department to make some of the largest personnel cuts in decades, although it does not propose closing any hospitals.
"I think the restructuring is helpful, but I don't see how you can justify keeping all these VAs open while you are stripping each one to the bare bones," Dr. Spagnolo said.
Overall, however, Dr. Spagnolo gives Dr. Kizer's management team credit for offering fresh ways to streamline the VA and focus more on outpatient care. "I'm totally in support of all that, but in the meantime, some of the messages that are coming out are demoralizing for some VA physicians," he said.
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